IBM Shares Sink After Weak Earnings Report

IBM shares fell in late trading after the blue-chip reported disappointing first-quarter operating earnings that met Street views, but fell from a year ago for the first time in 11 years.

Bloomberg News

IBM was down 4.2% at $188.12 in late trading. For the quarter, the tech giant reported first-quarter earnings of $2.38 billion, or $2.29 a share, down from $3 billion, or $2.70 a share, a year ago. Operating earnings were $2.54 a share, down from $3 a year ago, but equal to Street consensus.

Revenue fell to $22.48 billion from $22.91 billion a year ago, the eighth straight quarter of declining revenue. The big drag was hardware sales. Revenue at its systems-and-technology division, which includes its hardware business, fell 23%, to $2.4 billion. That is the 10th consecutive slide in sales for that division.

Performance was mixed at the bigger divisions. Sales at the global technology services unit was down 3%, to $9.3 billion. Software sales were up 2%, to $5.7 billion.

For the full year, the company said it expects earnings per share of $17, and operating earnings of $18 a share. Street consensus is $16.86 a share and $17.88 a share, respectively, according to FactSet.

Our colleague Kevin Kingbury noted the company is talking patience:

Heavy restructuring charges help bring on IBM’s first operating-EPS drop in 11 years last quarter. But as the company’s revenue fell on-year for an 8th-straight quarter amid slack demand and divestitures, CEO Ginni Rometty says, “As we move through 2014, we will begin to see the benefits from…shift[ing] aggressively to our strategic growth areas including cloud, big data analytics, social, mobile and security.” But how long with investors be willing to wait?

One thing’s for sure, if IBM stays weak through tomorrow’s open, it’ll be a weight around the Dow’s suddenly resurgent neck.